Prime Minister & the thundering tycoons

The Indian industrialist is angry and disturbed. As a class, industrialists and corporate chieftains tend to keep a low profile, especially when it comes to matters that could be controversial, even if remotely. They like to talk in platitudes, which means they do not need to take a stand. They may make generalised statements against a particular policy but they are rarely critical or blunt. No one wants to take on the government; you never know when a politician, or, worse, a babu, might hold something against you for something you said in a fit of bravado a long time ago.
Of late, however, the big shots of the business world have been speaking their mind, mainly about what they see as the many failures of the UPA coalition. They have written letters to the Prime Minister and given interviews individually and collectively, all saying the same thing — this government is not performing and there is an atmosphere of gloom in the country. Just last week they met at the World Economic Forum in Mumbai and used the platform to reiterate the same message over and over again: there is a policy stasis which is bad for the country and unless the government revs up, we could be staring at a big slowdown in growth.
Television reporters breathlessly reported how some of the biggest names in Indian business were disappointed at the slow pace of “reforms” and decision making of the government. Business reporters rarely ask tough questions of businessmen, so the latter get all the airtime in the world to hold forth freely, without being challenged. One fairly senior industrialist criticised the government for not allowing foreign investment in aviation when the sector was suffering; the reporter
nodded understandingly and sympathetically. Perhaps she was too young to remember the time, two decades ago, when the same worthy had condemned the government for opening up too much and formed a club dedicated to keeping out foreign investment in India. Dr Manmohan Singh was the finance minister then, and was the subject of much ridicule for breaking the shackles of the licence raj. Today we look back at that time as a seminal period in the history of independent India.
But back to this dirge of how reforms have stopped and how there is a “governance deficit” in the country. Azim Premji has talked about corruption, while the open letter written by prominent industrialists to the Prime Minister last January referred to the “deterioration of the value system of the nation”. Other issues that come up repeatedly are delay in clearances, a slowdown in the economy and lack of major policy initiatives. In short, businessmen and companies are leading a tough life that for this the government must take the blame. The government has responded with the list of decisions it has taken, including land acquisition norms, foreign direct investment in retail, the national manufacturing policy. These are significant policy initiatives. So is there a perception gap between the government and businessmen?
UPA-1 was a big hit with business. Its tenure, 2004-09, for the most part also coincided with a period of strong growth of the international economy. The Indian markets were booming (like the rest of the world) and so was India itself. Interest rates were low, people were buying houses and cars, salaries were going up. Average growth was in the region of 8.5 per cent, something that the country had never seen. Rural wages too increased, a combination of higher agricultural growth and social programmes, including a rise in minimum wages. The government had money to spend on its social programmes and no one seemed to mind that. Expenditure on policies such as NREGA, which reaped the UPA much political benefit, continued to go up but the criticism was muted, because the organised sector was growing, too.
Post 2009, a series of unfortunate events, some out of the government’s control, some a result of administrative apathy, inefficiency and neglect, happened simultaneously. If domestically corruption scandals broke out, externally, the global economy tanked. The period of resurgence in the stock markets was too brief and 2011 has been a wasted year for investors. Inflation is now a part of daily life and rising interest rates, deployed by the RBI as a weapon against inflation, seem to have failed as a strategy. (Though that would mean that the consumption story is strong, which is good for many
corporates.)
India continues to grow, and at a steady 7.5 per cent at least, but this does not seem to please anyone, certainly not the chambers of commerce. They are disappointed and they are making it clear. The rest of the world may be envying India, given that many sectors are thriving (and many companies are overvalued in the stockmarkets), but big business is unhappy. Why is this so?
I can think of two reasons. Firstly, as the economy slows down from the expected rate of growth, the corporate sector feels that the government is paying more attention to the aam aadmi than to business interests. Rural employment schemes have not slowed down and outlays have not fallen. Further, in situations where business came into conflict with farmers or tribals or any such group, the government tended to side with the latter — the farmers’ agitation in Noida and the tribals’ struggles over Posco and Vedanta are some examples. Some observers have seen this as an outcome of the pulls and pressures between the Congress leadership, which is social-programmes oriented, and the Manmohan Singh government, which is all for further free market reforms, but that is too simplistic an analysis. In any case, the industry bodies no longer have the clout they had earlier.
Businessmen have also not taken too kindly to the arrest of corporate executives in the various scams. Never before have so many high ranking officials of the private sector been jailed. None of those who have raked up the issue of corruption while criticising the government have talked about corporate involvement; that remains an uncomfortable subject. But it does bother them, because there is no saying where all this will lead. The bureaucracy and politicians are being extra careful while taking decisions. Not surprisingly, this also means the old days of cutting corners are now gone, so decisions do not get taken swiftly. This is not to say that the government shouldn’t take bold initiatives; it’s just that it has now got other things, besides big business, on its mind.